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John Lewis Partnership – socialism in action

Friday, March 13, 2009 — charliemarks

As capitalist-owned enterprises lay off workers and cut wages, the worker-owned store John Lewis – consistently voted one of the best for customer service by consumers – pays out a 13% bonus to staff. Why? Because they own the business – they won’t be asking themselves to take a pay cut!

I’m not saying that John Lewis is some kind of paradise in a sea of exploitation – it isn’t, but clearly, workers owning the enterprises in which they work is no impediment to building successful businesses (sales are up!) and responding to consumer demand (Waitrose are brining out a budget range, for example) whilst at the same time “sharing the proceeds of growth”, to coin a phrase.*

The annual bonus paid to John Lewis’s 70,000 staff has shrunk by almost a third after profits at the partnership were hit by the recession.

But staff still cheered the news that they will receive a bonus of nearly seven weeks’ pay, down from 10 weeks’ pay a year ago.

Because John Lewis is owned by its staff, every one of them – from the boardroom to the shop floor – receives the same percentage payout. This year it is equal to 13% of basic salary for staff at the Waitrose supermarket chain and John Lewis department stores.

At the John Lewis store on Oxford Street this morning, more than 1,000 shop staff hung over the balconies to learn what their annual bonus would be.

In the well of the atrium, Noel Saunders, managing director of the store, worked the crowd like a game show host, hinting the highest partners could expect was a 12% payout.

At 9.28am, as partners counted down from 10, his assistant Paul Thomas – who has worked in the floor coverings department for 20 years and was selected for scoring excellent results from mystery shoppers – fumbled with the envelope before pulling out a giant card bearing the figure 13%.

As customers peered through the doors, partners erupted, celebrating the bonus payment after a tough year on the shop floor.

The total bonus payout for 2008 is £125.5m, down from £180m for 2007.

“The key difference is this is a genuine bonus based on profit-sharing,” said Andy Street, managing director of John Lewis. “The word ‘bonus’ has become discredited in the economy, but for us it is something to celebrate. Our partners have worked harder than ever to achieve these results.”

The feel-good atmosphere pervaded all six floors with no grumbles from partners that the bonus fell short of last year’s bumper payout.

“Last year, 20% was a fantastic result, but in the current climate we are really happy to get a bonus as we see people around us losing their jobs,” said Charlotte Deane, who will use her bonus to catch up with her sister, who is travelling in California. “However much it is, it is a bonus, not a benefit, and I feel lucky to get it.”

Most staff canvassed expect to use the extra cash on a holiday. Indira Vakeria said she was planning a trip to India to visit her parents. “We are really pleased with 13%,” she said.

The company reported that its profits fell by 26% in 2008 to £279.6m. Chairman Charlie Mayfield warned that 2009 would be “another very difficult trading year”.

“Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level,” he said.

The partnership conceded it would no longer be able to hit its target of opening 10 stores in 10 years. It has already opened four, including branches in Liverpool and Cambridge, but beyond its new Cardiff store this autumn, and a shop at the Olympic site in Stratford slated for 2011, it said its aggressive growth plan would be “delayed”.

The company said it remained optimistic that two stores across the Irish Sea, one in Lisburn in Northern Ireland and one in Dublin, would open as planned but warned that other projects, including stores in Crawley and Portsmouth, might be held up. Retail schemes around the country are being mothballed as property developers grapple with funding shortfalls and collapsing asset values. Mayfield said the retailer was “working actively with developers to maintain our rate of growth” and remained committed to the expansion plan.

It is just over a year since John Lewis first admitted that its sales were being hit by the high street downturn. By the autumn, when the UK economy was contracting, the company was reporting double-digit falls in weekly sales.

* Please, don’t misunderstand me, I doubt that the Tories – expected to win the next UK election – will fulfill their promise of “sharing the proceeds” by forcing Tesco to become a cooperative. This is something the unions need to take up with New Labour, though…

12 Responses to “John Lewis Partnership – socialism in action”

I couldn’t agree more with this post, Charlie. I think that it’s true across the board that genuine worker participation and a business culture built around a genuine application of the idea of a team gets profits and results. Just think what could have been done with the mines, or the defence research institute, or the railways, or the power and water industries–or with building societies and cooperatives–if we had a genuinely democratic government. Instead, we have a group of banker support staff elected by a bare 21.5 percent of eligible voters.

Good post Charlie and John Lewis is an interesting case. One point to throw in though is that the JLP model has no role within it for independent trade unions, and clearly some ‘partners’ will always be more equal than others.

Tesco do recognize unions, as do Asda (part of the infamous Wal-mart group), the Co-Op and some of the other big players. I’m not sure if the JLP have a formal position on unions but I’d be interested to know if anyone else does

[…] John Lewis Partnership – socialism in action « Rebellion Sucks! = a blog for socialism & self-d… Interesting post on the John Lewis Partnership – perhaps now is the time for new (or indeed old!) types of company ownership to come to the fore? […]

JL works in a market. The market is not a capitalist market, it is a market. Capitalism is where industry and commerce is owned by persons other than all those who work for the company. With limited liability companies that can be anyone who buys the company shares. You cannot buy shares in JL so it is not capitalist.

Please ask the ex John Lewis employees from Stead Mcalpin Carlisle and J H Birtwistle Lancashire How good the John Lewis Partnership is to work for, they have recently sold off the two companies to Apex textiles which has subsequently gone into administration leaving workers without jobs and any redundancy package, this has all happened within 18 months of John Lewis selling off these companies, why did John Lewis sell these workers down the river?

One of my first part time jobs at 16 was with JLP (Late 80’s – The plum £2.40/hr Co-op job turned me down, so I had to go for £2.20 at Waitrose), and whilst it was a really nice place to work, I always wondered how they would treat the shop floor staff if it came to a crunch. They made big noises about being a partnership, and on my first day the store manager specifically told me I wasn’t to join a union as it would only hurt good partner relations (I was in the NUT from my other part time job anyway). There’s a big benefit to this sort of employment relationship but in a large corporation, I’m worried that partnership may only go so deep – you always do need a union behind you.

I have a question. JL is owned by the employees and is a partnership. Are the partners protected by any form of limited liability as share holders are? If they were suddenly to make a huge loss and went bust would the employees as shareholders be liable for any large debt that may have built up?

John Lewis a.k.a. Waitrose has signed to create a new supermarket in place of existing low price much needed shops in Acton Mall London W3. Most people in the area cannot afford to shop at Waitrose; they will have no where affordable to shop now (losing Iceland, 99p Store, Poundland, JB Sports discount, Supersaver, Peacocks, etc). So John Lewis Partnership and all your high ideals, how do you justify this?
Time to boycott John Lewis and Waitrose.